Kindred exploring potential merger or sale after resurgent Q1

for sale sign
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Kindred Group has notified investors that it is exploring “strategic alternatives” for its long-term future and explained that it would consider a partial or full merger or sale. 

Coinciding with its Q1 financial results, Kindred’s board of directors stated that it had “unanimously decided to initiate a process to explore strategic alternatives for the Company”.

The Swedish-based firm has set no strict timetable for the review of its business and is intently focused on maximizing shareholder value by any means, including a merger or sale in a full or partial capacity.

A statement read: “As part of this strategic process, the Board of Directors will consider all potential alternatives that can deliver value for the Company’s shareholders. Such alternatives could include a merger or sale of the Company (in whole or in part) or other possible strategic transactions.”

As part of the process, Kindred has hired PJT Partners, Morgan Stanley, and Canaccord Genuity to act as financial advisors ahead of the strategic alternatives review and has enlisted White & Case as its legal advisor through the process. 

“There can be no assurance regarding the results or outcome of Kindred’s review of strategic alternatives,” the statement concluded.

“Subject to compliance with its ongoing disclosure obligations pursuant to applicable laws and regulations, Kindred undertakes no obligation to make any further announcements regarding the exploration of strategic alternatives unless, and until, final decisions are made by the Company’s Board of Directors.”

Q1 bounceback following blowout 2022

As mentioned, the announcement came on the same day as Kindred published its Q1 accounts which revealed that the company had made strides towards renewed success following a poor year of trading in 2022. 

Kindred confirmed revenues of $382.4m, encompassing its global brands Unibet and 32Red as well as its B2B services. This marks an increase of 24% YoY and shows encouraging signs of a year of recovery for the group. 

Those heightened prospects and revenues helped profit before tax jump to $37.4m and profit after tax to $32.5m, marking a growth rate of 75% for both figures.

The group’s underlying EBITDA stood at £49.4m while EBITDA was recorded at $59m, up significantly from the $27.5m recorded in Q1 of 2022, though profitability is still some way off the $122.3m recorded in Q1 of 2021. 

Back in Business in North America

Kindred has improved its standing in North America and has doubled down on its target to become a top 10 operator in the US markets where it is live. 

From its Unibet brand, gross winnings revenue stood at $9.98m, up 8% YoY and up 87% from Q4 of 2022, when it made a record payout to Mattress Mack.

This also represents a return to form against 2021 comparatives, when the group recorded $9.2m in gross winnings revenue.

In its bid to become profitable by 2025 in North America, the group reduced its marketing spend by $7.9m from Q4 2022, which caused a drop in depositing players and total activity. This did help EBITDA losses in North America narrow to $6.9m.

A major development for Kindred’s North American fortunes is the approval of its proprietary platform in New Jersey, which will roll out through May. It will also roll the platform out in Pennsylvania and Ontario throughout the year before making any big decisions, such as leaving jurisdictions, as it did with Iowa last year. 

A Kindred statement read: “This is a key milestone for our North American operations. Kindred’s North American customers will benefit from a more tailored and improved user experience which is at the heart of Kindred’s strategy, whilst launching the proprietary platform will allow for scalability and increased cost efficiency.